Highlights

  • Central banks and trade headlines continue to be the main drivers of markets, with equities shrugging of uncertainty and advancing on status quo trade news and stimulus expectations. We expect this trend to continue, but decent earnings will also be needed.
  • Global economic data are not pointing to recession, but rather towards trend levels, although manufacturing remains weak. Nonetheless, ongoing uncertainty could eventually hurt sentiment, adding to downside risks.
  • Yields have stabilized, but are still pricing in an aggressive easing cycle. Markets might need to adjust, but a sharp back-up is unlikely given growth concerns. We prefer shorter durations but maintain some exposure to core positions as protection.
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